It wasn't until January 31, 2005, when Bill Black (NEBRA Treasurer) was asked to send a bank check to the hotel that the cost of the Banquet became known to him.
Nowhere in any of the Board's previous meeting minutes was the cost of the Banquet recorded.It was at this point that Bill immediately voiced his
point was that spending that much money (nearly 50% of NEBRA
's revenue) on entertainment was not consistent with and limited to the purposes for which NEBRA was established, and far exceeded the "necessary and reasonable" standard set forth by the IRS
for business expenses.Bill
then gave his
resignation, noting that as a lawyer, he
was obligated to do so as he
was now in conflict in advising NEBRA
The Board felt it had two options: renegotiate the cost to a more reasonable level, or cancel the event altogether and pay a cancellation penalty.The Board did not feel that not sending the check (as Bill
had advised) was an option; a contract had been signed by the (previous) Board and included a severe cancellation penalty.
This situation arose because the Board (past and present) did not do its job of keeping all Board members and officers (in this case, Bill Black
, especially) informed of contractual arrangements before they were made.Because of that, Bill
, as NEBRA's legal counsel was not able to render an opinion on the matter that would have prevented the contract from ever being signed in the first place or at least without further discussion and reduction of the cost.
Further, the Board was operating under the premise that the final net cost was the important figure to consider, and not the initial outlay of $7,000, as Bill
subsequently clarified. (See item #1, below.)
To avoid this type of situation from recurring, the Board will take (has taken) the following corrective actions:
1) Have Bill
(or other counsel) present to the Board an overview of corporate law/governance and being a ,501(c)(3) (tax exempt) corporation. (This was done at the 2/12/05 Board meeting.)
Prior to these events, Bill
had notified the Board of his
intention to resign his
positions in order to focus on his
various business activities.